Uber confirms SE Asian sale to Grab

By MARK RAO

Uber Technologies Inc has completed the sale of its South-East Asian business to rival Grab as the global ride-sharing company is focusing on core areas rather than competing in challenging markets.

Described as among the largest deals in South-East Asia, Grab will assume control over Uber’s ride-sharing and food delivery business (Uber Eats) in exchange for Uber acquiring a 27.5% stake in the combined unit.

Uber CEO Dara Khosrowshahi said the merger — the third of its kind undertaken by the company after China and Russia — is primarily aimed at shoring up existing operations in core markets, while continuing to benefit from growth in markets elsewhere via equity stakes.

“One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors,” Khosrowshahi said in an email sent to Uber staff, which was made public on the firm’s website yesterday.

“This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”

Uber also holds a 20% stake in Chinese ride-sharing company Didi Chuxing and a 37% stake in Russian technology player Yandex NV.

After investing US$700 million (RM2.72 billion) in South- East Asia, Uber will surrender its regional business to hold a 27.5% stake worth several billion US dollars in homegrown e-hailing player Grab. Khosrowshahi will join Grab’s board of directors.

Uber will officially terminate its services in the region on April 8, resulting in some 500 Uber staff moving to Grab, while Uber drivers can opt to join the Grab platform.

The Uber app will continue to operate as usual over the next two weeks, while Uber Eats will run until the end of May this year before moving to the GrabFood platform.

Grab will now be backed by Didi Chuxing, SoftBank Group Corp and Uber, all three of whom invested in the company for substantial stakes, as it looks to seal its dominance in the region.

Today, Grab operates in 195 cities across eight Asean countries, commanding 95% of third-party taxi-hailing apps and retaining over 2.3 million drivers, while securing approximately US$4.63 billion in financing since May 2014.

The ride-sharing company will now take control over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

In a statement released on the same day, Grab said it will leverage on the merger exercise to become the leading online-tooffline mobile platform in South- East Asia, and a major player in the food delivery game.

Its group CEO and co-founder Anthony Tan said the combined business will be a leader in platform and cost efficiency in the region. “Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers,” Anthony Tan said.

“Their trust in us as a transport brand allows us to look towards the next step as a company: Improving people’s lives through food, payments and financial services.”

The company will also expand its GrabFood food delivery business into Singapore and Malaysia, alongside its existing markets in Indonesia and Thailand.

“We will rapidly and efficiently expand GrabFood into all major Asean countries in the next quarter,” Grab co-founder Tan Hooi Ling said.

“We’re going to create more value for our growing ecosystem of consumers, drivers, agents, and now merchants and delivery partners.”

She added that GrabFood will also help facilitate the continued adoption of the GrabPay mobile wallet and support the company’s financial services platform.

GrabPay will be made available across all major South- East Asian countries by the end of this year.